SteelMint: PELLEX down further by INR 200/t on fall in sponge prices, lower bids

SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, stood at INR 14,000/tonne (t) DAP Raipur on 15 Mar’22, down by INR 200/t against the last assessment on 11 March. Around 6,000 t deal was heard in this publishing window.

Rationale:

• PELLEX has been derived using data points: i.e. trades, offers and bids. You can download the detailed methodology by clicking on this link Click here.
• One deal was reported and therefore taken into consideration in this publishing window, and accorded 50% weightage.
• Eight (08) firm offers, bids and indicative prices were reported. Seven (07) were taken for price calculation and given 50% weightage.
• SteelMint has also received three bids and all were considered for the calculation of index.

Raipur-based pellets producers kept offers stable at INR 14,500/t exw for Fe 63% (+/- 0.5%). However, a few offers were also heard at INR 14,000/t but seller’s confirmation could not be received till the time of publishing this report.

Jharsuguda-based pellet makers resumed offers and sold decent quantity at INR 13,700/t exw in the local market.

The disparity between offers and bids still prevails as sponge iron and billets prices fell sharply in the last two days. Buyers are reluctant in making any deal for the next few days till the market situation stablises. Amidst the volatile conditions, buyers are avoiding to take any risk.

At Odisha Mining Corporation’s (OMC’s) iron ore lump auction today, bids were received for around 785,000 t i.e. 93% of the total quantity of 841,000 t. Bids were lower by up to INR 1,250/t as against the last auction in mid-Feb’22. The drop in sponge iron prices and weak sentiments amidst a correction in iron ore prices globally on rising Covid cases in China resulted in the fall in bids.

Pellets-based DRI (P-DRI, FeM 80%) prices in Raipur decreased sharply by INR 3,700/t to INR 40,000/t exw today on a weekly basis. However, on a daily basis, prices fell by around INR 1,000/t.

Indian pellets market overview: Domestic pellets prices continued the downward trend across regions on falling sponge and billets prices.

• Durgapur pellet offers are heard to have decreased by around INR 250/t to INR 13,000-13,500/t exw. Buyers expect a downward price correction in the near term.
• Prices in Bellary were down further by up to INR 11,000-11,100/t exw today as against INR 11,250/t on 11 March.

Region-wise pellet offers and deals: